Interview with Roderick Chambers, The Wire 2SER

15 May 2024

JOURNALIST: Roderick Chambers put to Senator Jane Hume Shadow Finance Minister, that would she agree that a $9.3 billion surplus was a pretty good result for the economy?

JANE HUME: Well, it’s a surplus that was achieved not through the hard work of Jim Chalmers and Anthony Albanese. But through the hard work of ordinary Australians, it really has been delivered by both those high commodity prices, but also through bracket creep, which has been caused by inflation bracket creep means that when you work harder or take on those extra hours or take on a new job or pay rise, you're actually being pushed up into a higher and higher tax bracket paying more and more tax. And of course, the government coffers benefit from that. This surplus is really one that's been delivered by the Australian public, not by Jim Chalmers,

RODERICK CHAMBERS: But with the bracket creep, I mean, Jim Chalmers is saying that well, that's what the tax breaks are for that are coming up in July one so that's going to take care of that a bit, isn't it?

JANE HUME: Well, certainly the original stage three tax cuts directly tackled bracket creep partially by getting rid of an entire tax bracket. And unfortunately, even though that reform was funded in the budget, it had already been legislated, the Government still didn't have the appetite to go ahead with it. So bracket creep remains a problem and that is a big concern because it sucks the aspiration out of society.

RODERICK CHAMBERS: And a lot of people are concerned about cost of living. It's certainly top of mind for people in government as well. But is there enough relief for cost of living in this budget, do you think?

JANE HUME: One of the hats that I wear is the chair of the Cost of Living Committee, the Senate committee and that's given me the opportunity to travel right around the country in the last 18 months or so talking to people about how the cost of living crisis is affecting them affecting their businesses affecting their communities? Overwhelmingly, the best way the only way that you can sustainably bring down the cost of living is to tackle inflation is to tame that that inflation dragon. If your fiscal policy is expansionary, if it's a high spend budget, it actually works in the opposite direction to the Reserve Bank and the monetary policy. It's like the monetary policy, the Reserve Bank is putting its foot on the brakes and the Government is putting its foot on the accelerator they've spent at $4, for every $1 that they have saved, and that's a real concern because that fuels inflation further, which means interest rates stay higher for longer, which means you feel poorer, because you are poorer.

RODERICK CHAMBERS: So you'd prefer a bigger surplus?

JANE HUME: No, well, we would have preferred a surplus that then went to reducing debt. We would have preferred a genuine restraint in the expenditure side. You know, no boondoggles. But even that expenditure that seems like temporary relief, if it's not well targeted, that can actually have detrimental effects to inflation overall, which makes the pain stay around for much longer.

RODERICK CHAMBERS: Do you agree with Treasury that the inflation figures is going to keep down for the rest of the year?

JANE HUME: Well, I think that the energy relief that the Government is offering may put a temporary bandaid on headline inflation figures. But essentially once that relief comes off, it pushes the problem out into the future and the Reserve Bank aren't stupid. You know, they know the difference between that sort of smoke and mirrors headline inflation. Figure coming down because energy bills are temporarily reduced by a small amount. And that core inflation, that underlying homegrown inflation that Michele Bullock, the Governor of the Reserve Bank, has identified as the problem and that hasn't been tackled in this budget.

RODERICK CHAMBERS: So unemployment figures are going to be up a little bit and that's one of the things that Jim Chalmers felt was going to keep the inflation down and I think Michele Bullock also is of that opinion. Is it necessary to have a higher unemployment figures to bring down inflation?

JANE HUME: Well, I think that some of the projections in this budget are actually pretty bleak for the economy. We've seen that, you know, growth projections are down, that there'll be deficits out as far as the eye can see and yes, you're right unemployment is going to increase. That's really what Jim Chalmers is relying on in order to get inflation down, which is a real shame. There is another way and that is to fire up productivity and that seems to be missing entirely from this budget.

RODERICK CHAMBERS: Well, one of the things that should make things better is if Australia becomes a green energy superpower. Is that something that you can see from this budget?

JANE HUME: It certainly sounds like a great slogan. I'm not entirely sure that the policy directions that the Government have chosen here are going to achieve that outcome or even if they do at what cost to your average taxpayer. There's a $13.7 billion taxpayer funded subsidy for businesses that are in hydrogen or critical minerals. Now, the companies that are in this space, and there's not very many of them, run by some pretty wealthy individuals. There's not too many paupers running a critical minerals company or hydrogen or hydrogen company. And yet the subsidies are huge. I mean, $13.7 billion. These are sectors that will do well on their own because there's demand for them already, particularly in that critical minerals, spaces, huge amounts of demand. If you wanted to make these companies more viable, more attractive to more investors, well get your energy prices down by putting more energy into the system, particularly gas or hydrogen, hydrogen needs gas. And if there isn't enough gas out there, well then hydrogen is not going to be commercially viable.

JOURNALIST: Victorian Liberal Senator Jane Hume. Shadow Finance Minister speaking there with Roderick Chambers.